La Suerte seeks lower tax rate for withdrawal of Pall Mall stocks

La Suerte Cigar & Cigarette Factory is asking the Bureau of Internal Revenue (BIR) to allow the company to withdraw Pall Mall cigarettes from its factory at a lower tax rate to replenish its inventory in the market.

La Suerte, the local partner of United Kingdom-based British American Tobacco, wants the BIR to allow the withdrawal of Pall Mall at an excise tax rate of P6.74 per pack instead of the P26.06 per pack previously ruled by the agency.

A company official said there was an urgent need to replenish the inventory of Pall Mall cigarettes in the market but government sources said the BIR has yet to act on La Suerte’s request amid an ongoing review by the Department of Finance (DOF) on the matter.

The DOF is reviewing its July 24 ruling which affirmed the final excise tax rate of Pall at P6.74 per pack or P19.32 lower than the P26.06 per pack tax rate earlier imposed by BIR.  The BIR had slapped the higher tax rate on Pall Mall as the brand was previously sold in duty–free shops.

In its July 24 ruling, the Finance department reclassified Pall Mall as a mid-priced brand which is subject to the lower excise tax of P6.74 per pack.

The DOF initiated a review of the ruling after four cigarette companies appealed to the department.

Fortune Tobacco, American-owned Philip Morris, Associated Anglo-American Tobacco Corp. (Anglo-American) and Japan Tobacco International (JTI) Philippines argued that Pall Mall should be paying higher taxes as this was previously sold in duty-free shops.

A BIR source said La Suerte could withdraw from the warehouses but at a higher excise tax rate of P26.06 per pack as stated in the bureau’s Feb. 22 ruling.

The company should first pay the higher rate of P26.6 per pack and seek a refund later, the BIR source said.

La Suerte, however, is not willing to pay a higher excise tax just to be able to replenish the supply of Pall Mall cigarettes in the market.

A company source said it would be difficult to file a refund before the BIR.

Finance Secretary Margarito Teves said the department may be able to decide on the Pall Mall controversy by the end of the month or on the first week of November.